Where to put flipping income?

[Quianay Laing]

Hi there!! We are doing our first flip and are debating where to put the income going forward in terms of managing our business.. We know we are going to immediately use some to purchase more property.

Those of you who flip- do you draw a salary from your business? (Thank you)

[Jaron Walling]

@Quianay Laing Withdrawing money from a business is difficult to explain but if this is your 1st flip I wouldn't worry about it. Once you get a couple deals under your belt things need to change. Working with a CPA is paramount for avoiding unnecessary taxes or issues with the IRS. I found a thread from 8 years that discusses how to move money from LLC to a personal checking account. Good luck!

https://www.biggerpockets.com/forums/51/topics/67672-withdrawing-funds-llc

[Quianay Laing]

@Jaron Walling thank you!!!

[Jennifer Gligoric]

It depends on if you have a S Corp or LLC or are doing business as a sole proprietor.

One thing you do not want to do is comingle. If you are doing that, I would advise stopping that right away. So many clients of ours admit to using their LLC or personal credit cards to pay a variety of expenses and bills, trying to code them all as straight business expenses then asking their tax person to sort that out later. If you work from home, you are only allowed to claim a portion of bills that directly correlate to the square footage of your home office space and certain restrictions apply.

[Basit Siddiqi]

@Quianay Laing

The logistics of how and when you withdraw will depend on the entity structure(LLC/Sole propeitor - withdraw)
(S-Corp/C-Corp will be Salary/Dividend/Withdraw).

What to use the funds will be up to you and what you decide to use the money for.
You should set aside some money for the taxes that will need to be paid. You may want to pay yourself for a job well done and the rest to the next flip.

You may want to consult a tax adviser on the logistics of the how.

[Ned Carey]

It depends on you personal situation. If you can live off your current income I would put all the money back into the business.

Most here have commented on the logistics of withdrawing the money. That is easy but again it depends on your particular business structure as to how to go about it.

Currently my partner and I keep all our rental money in the company to build more rentals. In our flip company with take both a salary and distributions when when get excess cash.